Hyderabad recorded the highest office space absorption among the top-eight cities in the country in the third quarter of 2015, according to property consultant Cushman & Wakefield, as political stability in the region saw more corporates sign property deals. Net absorption of office space in the city was recorded at 24 lakh sq ft, while commitments were at 3.85 lakh sq ft, the highest office space net absorption witnessed after the formation of Telangana and the highest since 2008.
“The rental value at which quality office space is available in the city has added to the attractiveness of the location,” said Sanjay Dutt, executive managing director, India, Cushman & Wakefield. “We expect demand for office space to remain robust as corporates continue to relocate, expand and adopt workplace transformation strategies.”
Bigger cities like Mumbai and Delhi saw lower net absorption of office space due to lack of quality space, according to Cushman & Wakefield. While Mumbai recorded 4 lakh sq ft, Bengaluru saw 6 lakh sq ft absorption. The national capital and Chennai saw net absorption of 11.6 lakh sq ft and 4.9 lakh sq ft, respectively.
Uncertainty over demerger of Andhra Pradesh had delayed office space plans of several companies. With the formation of the new state and with new policies being rolled out by the new government, unease among corporates has eased and they have started picking office space.
Information technology companies that had kept their expansion on the backburner in Hyderabad due to the Telangana crisis are back in action. Some of the companies that have expanded operations there are Accenture, Delloitte, Uber, Tata Consultancy Services and Amazon.
Vineet Surana, director at APS Property Solutions, a property brokerage firm in Hyderabad, said his business has almost doubled after the clarity on Telangana. “It’s boom time for commercial real estate market here in Hyderabad. Transactions and pipeline has more than doubled for our company over the previous year,” Surana told ET.
According to JLL India, office rents in Hyderabad rose 10 per cent from the year-ago quarter and by almost 23 per cent from the last trough in 2009. The city, which is home to offices of Microsoft, Google, Facebook, Amazon and Yahoo, saw property valuations mostly being stagnant or sometimes increasing by less than 2 per cent.
“We anticipate a rental hike of 15-20 per cent within a year. The combination of affordability and upbeat business environment together is driving the demand for commercial spaces here,” said Bijay Agarwal, MD, Salarpuria Sattva Group.
The builder recently handed over 1 million sq ft to Novartis, making it its largest commercial campus in India. Salarpuria is also in the process of completing 1.5 million sq ft office space that will be completed in the next nine months.